Order Blocking Ecuador Award Loses Some Bite

MANHATTAN (CN) – A group of Ecuadorean natives will face fewer restrictions in trying to collect an $18 billion judgment against Chevron for oil damage as Chevron fights to invalidate the verdict, the 2nd Circuit ruled Thursday.

For now, however, the Ecuadoreans cannot delay the start of a November trial that may lead a judge to declare the award unenforceable. The federal appeals court said it would revisit the decision in front of a merits panel. On Feb. 14, a provincial court in Lago Agrio, Ecuador, slapped Chevron with the $18.2 billion penalty for oil contamination in the Amazon, after a trial that spanned two continents and 18 years of litigation. In the months leading up to the verdict, Chevron launched a campaign to invalidate what they described as an “adverse judgment,” suing the Lago Agrio plaintiffs, their lawyers and contractors, and the Ecuadorean judiciary in multiple courts internationally. In one Manhattan federal lawsuit filed two weeks before the verdict, Chevron accused the Ecuadoreans – and their former lead attorney Steven Donziger – of extortion. U.S. District Judge Lewis Kaplan agreed to pre-emptively block the award with a temporary restraining order, then issued a preliminary injunction and scheduled an early trial to declare the award unenforceable. One of the provisions of the injunction barred Patton Boggs, a Washington, D.C., law firm representing the Ecuadoreans from benefiting financially from its work. On Tuesday, the firm’s attorney John Tyrrell complained at a hearing that this provision scared off international backers and caused Patton Boggs to “hemorrhage blood we don’t have.” Patton Boggs made the same argument in a conspiracy lawsuit last month. The 2nd Circuit on Thursday struck that provision from Kaplan’s injunction, and granted the Ecuadoreans an expedited appeal on the remaining provisions forbidding “commencing, prosecuting, or receiving benefit from recognition, enforcement, or pre-judgment seizure or attachment proceedings.” The Ecuadoreans were less successful in their bid to stay the upcoming trial, currently slated for November. A three-judge panel denied that motion without prejudice, allowing them to renew it before a merit panel in the future. As with the previous 2nd Circuit decision, both sides rushed to declare victory. “We believe that Chevron has turned the law on its head and we are gratified that the Second Circuit has decided to allow a full airing of the legal issues on an expedited basis,” the Ecuadoreans’ spokeswoman, Karen Hinton, wrote in a statement. She added that the Ecuadoreans plan to challenge the injunction and the trial in late August or early September. Chevron’s spokesman noted that, while the 2nd Circuit may have opened the door to the Ecuadoreans’ challenges, the injunction and the trial are still in place. “The Lago Agrio plaintiffs have failed for a third time at the Second Circuit,” Kent Robertson countered in a statement. “The preliminary injunction remains in place and the November trial will proceed.” Posturing aside, the appellate court’s decision, and the hearing that preceded it, marked a rare roadblock in Chevron’s ongoing litigation over the verdict.